Trepp Bank Loan Benchmark Report: Construction Delinquencies Hit Highest Level Since Recession
Trepp released its quarterly report of bank portfolio loan performance in commercial real estate, multifamily, and construction. The first quarter 2020 results show that construction delinquencies have increased for the third consecutive quarter and are now at the highest level seen since the recession.
NEW YORK, June 24, 2020 /PRNewswire-PRWeb/ -- Trepp, a leading provider of information, analytics, and solutions to the structured finance, commercial real estate (CRE), and banking markets has released its quarterly report of bank portfolio loan performance in commercial real estate, multifamily, and construction.
The first quarter 2020 results show that construction delinquencies have increased for the third consecutive quarter and are now at the highest level seen since the recession.
The Trepp bank loan performance benchmark report is derived from the Trepp Anonymized Loan Level Repository (T-ALLR) and provides current and historical quarterly loan level attributes and performance data, including delinquency rates and charge-offs, on loans with current outstanding balances of $177 billion.
"Despite the economic disruptions and interest rate volatility in the latter part of the quarter, new originations in Q1 were relatively strong totaling $11.7 billion, down from $15.1 billion in Q4," according to Russell Hughes, vice president who manages Trepp's data consortia initiatives.
"Many of the new originations were already in the pipeline when the pandemic began limiting the size of the origination drop off."
Despite lower originations than in the prior quarter, the overall T-ALLR CRE portfolio grew by $4.2 billion – a quarter over quarter growth rate of 2.4%. Construction loans saw the largest percentage increase at 4.0%, while CRE realized the largest balance increase with a bump of $2.3 billion.
Delinquency rates for construction loans increased for the third consecutive quarter and now stand at 1.07%, up from 0.74% in the previous quarter and the highest rate since mid-2013 when delinquency rates were still coming down post-recession.
Multifamily construction loans, which represent 40% of construction loans based on outstanding balance, had an overall delinquency rate of 1.08% at quarter-end while construction loans for hotels stood at 2.99% and represented 5% of current loan balances.
Delinquency rates for CRE and multifamily loans remain near historic lows. The impact of the pandemic on delinquency rates for Q1 is also likely muted, given the timing of the economic disruption, indicating possible broader issues in construction lending.
For more information on T-ALLR, email [email protected] or visit http://www.Trepp.com. If you are interested in receiving upcoming results for Q2 2020, contact Alex Karavousanos at 212.754.1010.
About T-ALLR
The T-ALLR Quarterly Benchmark Report analyzes loan performance across a number of data points including delinquency, CRE property type distribution, average loan size, interest rate spread, balance-by county, maturity year, and origination quarter and year. The report, which is generated from Trepp's managed bank loan data consortium, captures CRE and commercial and industrial (C&I) data from participating commercial banks. The T-ALLR data is anonymized and aggregated to provide insights into trends and pockets of risk while protecting the security of the consortia participants.
About Trepp
Trepp, founded in 1979, is the leading provider of information, analytics, and technology to the structured finance, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency, and investment performance. From its offices in New York, San Francisco, and London, Trepp serves its clients with products and services to support trading, research, risk management, surveillance, and portfolio management. Trepp is wholly owned by Daily Mail and General Trust (DMGT). For more information, visit http://www.Trepp.com
SOURCE Trepp
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